There may be delay in implementation of the zero-tariff grains importation policy of the federal government as Financial Vanguard reliably learnt at the weekend that the Nigeria Customs Service (NCS) is yet to receive a comprehensive list of the firms to select for participation in the intervention programme.
Investigations also revealed that the Federal Government is still working to fine-tune policy guidelines to address gaps in the earlier document.
For instance, the document released last week contained details of those qualified to participate in the importation of rice and the type of rice to be imported.
According to the guidelines, only husked rice or paddy rice (rice grain, as harvested from the farm before milling) will be allowed into the country.
The guidelines also stipulated that it will not be an all-comers affair, as it set criteria for those to be allowed to import the husked rice. It provides that only companies that have capacity to mill 100 tons per day and had been in business for at least five years will be allowed to import paddy rice. They must also have been involved in backward integration with farms that can produce the volume of import they want to undertake.
The policy states: “To participate in the zero-duty importation of basic food items, a company must be incorporated in Nigeria and have been operational for at least five years. It must have filed annual returns and financial statements and paid taxes and statutory payroll obligations for the past five years. Companies importing husked brown rice, grain sorghum, or millet need to own a milling plant with a capacity of at least 100 tons per day, operated for at least four years, and have enough farmland for cultivation. Those importing maize, wheat, or beans must be agricultural companies with sufficient farmland or feed mills/agro-processing companies with an out-grower network for cultivation.
“The basic food items eligible for the zero percent duty rates are: Husked Brown Rice; Grain Sorghum; Millet; Maize; Wheat; and Beans.
“The Federal Ministry of Finance will periodically provide the NCS with a list of importers and their approved quotas to facilitate importation of these basic food items within the framework of this policy.
“The policy requires that at least 75% of imported items be sold through recognised commodities exchanges, with all transactions and storage recorded. Companies must keep comprehensive records of all related activities, which government can request for compliance verification.
“If a company fails to meet its obligations under the import authorisation, it will lose all waivers and must pay the applicable VAT, levies, and import duties. This penalty also applies if the company exports the imported items in their original or processed form outside Nigeria.”
Expectations of many people was that the duty-free grains import would be such that everyone that has the resources to import them could simply order them, in order to bring about, a quick crash in prices of the affected commodities.
Customs eager to implement policy
Comptroller-General of Customs, Mr. Adewale Adeniyi, has indicated that his organization is eager to implement the policy, which he described as “a bold move to address the immediate challenge of high food prices.
He pledged Customs’ readiness to give effect to the implementation, having undertaken critical operational adjustments in order to effectively and efficiently see to the seamless importation of the commodities.
The NCS boss revealed that special corridors will be created to facilitate clearance of the food items, adding, “Our teams are supporting the development of the guidelines and will swiftly integrate these guidelines into our systems and processes to ensure seamless implementation as soon as they are released. This proactive stance will minimize any potential delay or confusion in the clearance process for the affected food items.
“In line with this, we are creating a special corridor to expedite the clearance of the listed food items – rice, wheat, maize, and sorghum. This dedicated channel will streamline the importation process, reducing clearance times and potential bottlenecks. The activities around this corridor will be managed by specially-trained officers to ensure both efficiency and compliance with all necessary regulations.”
Stakeholders divided over guidelines
Meanwhile, stakeholders in the maritime industry are currently divided over the policy and called for an extension of policy beyond six months.
While some are saying that the policy may not achieve its desired deliverables, others are of the opinion that there is no clarification of the circular introducing the policy.
Speaking on the development, Mr. Lucky Amiwero, President of the National Council of Managing Directors of Licensed Customs Agents, NCMDLCA, said that the memo on the policy approved by the President should be explained for Nigerians to get a clear understanding of the intention of government.
Amiwero disclosed he had written to government on the matter adding that if what he advised government to do is different from what they are doing, then the policy does not suit the letter he wrote.
He stated that conditions given by government for importers to bring these food items into the country are too stringent, adding that its conditions may defeat the purpose of the policy.
He said: “What government is trying to do is avert the very calamity that may engulf the country because everybody is affected.
“The situation in the country is so tough that people are losing their jobs, people are closing shop and people don’t have what to eat.
“When you give people conditions, you may end up destroying an already complex situation. The government should sit down and articulate what they are trying to do and work towards achieving it.
Similarly, Dr. Muda Yusuf, Managing Director and founder, Centre for the Promotion of Private Enterprise, CPPE, an NGO committed to the ideals of free enterprise and private sector development, said that conditions are inline to regulate the implementation of the policy
Yusuf explained that the conditions will serve two purposes and ensure that the policy is not abused.
He said: “The conditions were meant to achieve two majors. The first is to ensure that there is no abuse because if you leave it completely open, all manner of people will come into the space and the whole thing may be abused.
“So in order to allow for proper streamlining of the whole process, those guidelines were necessary to restrict it to companies that can easily be monitored so as to be able to achieve the right outcomes.
“The second major point is the fact that government also desires to give some protection and preference to those that have already invested in the sector, not just somebody who has never invested in rice mills or rice farms and wants to start importing parboiled rice. This group of people do not have much stake in the sector as it were.
“No, I don’t think so. We have lost time already. You can see that the circular is effective from the 15th of July or so, and one month is already gone. I know what the import cycle is, and before you place an order or do other things, another two months is gone.
“I think that at the end of the day, there may be a need to extend it to get the right kind of impact. Another important thing is that I have heard some people say that it will affect local farmers. Anybody who has read the guidelines knows that the interest of those who have invested in rice mills and rice farms have been taken care of.
“Secondly, government could also offer a minimum guarantee price for any local producer, so that nobody will complain that because the government has imported, that is why he is not selling.
“The government can decide to take the goods off them and put it in their reserve to avoid loss and as an incentive for farmers. It is called the minimum guarantee price.
“It is an effort to support them and complement their efforts. It is temporary, so government is careful not to undermine those who have already invested in the process. That is why they have made the process inclusive. This is so that they can benefit from it and whatever investment they get, they can plow back in the rice mill or in the rice farm. That is my understanding of why those conditions were put there.”
100 tonnes capacity excludes our members – RIMFAN
The National President, Rice Millers Association of Nigeria, RIMFAN, Peter Dama, said: “Generally, we will not be happy about it but situation has led to this kind of move by the Federal Government, and drastic situation needs drastic action, because of the difficulties our farmers have been having in this country we have been unable to certify a number of rice mills in this country in terms of supply of paddy.
“In addition to that, the insecurity has befallen a number of farmers, and farmers are very scared going to farms to cultivate because of kidnapping and payment of ransom that in it have affected the farmers.
Not only that, the withdrawal of fuel subsidy has caused and led to the high cost of production, and everything is very expensive.
“We do not have adequate paddy but then if the government in its wisdom has decided to import and give to millers at zero per cent import duty, well because Nigerians are very hungry, Nigerians do not have enough and the mills do not have enough to mills in order to sell to Nigerians to feed we will not say no but then we have to caution that this temporary measure should not be allowed to discourage our local farmers from producing rice in the near future because if the borders are opened it means this country will be flooded with what they have said they have removed import duty on.
“So, it is our belief that since it is a temporary measure, let it be that temporary measure while we look at the possibility of what the government is going to do or going to do in terms of its policies and programmes that will lead to increase in terms of production in this country.
“Generally, we have our views but like I said drastic measures of what has happened need also drastic measures to be taken. The dollar exchange rate has gone very high, we are scared that the foreigners, particularly, those from the South-East Asian countries would not be the people that would be bringing in these things, creating jobs for their own people, and here in our own country we are just consuming and buying.
“We want the government to look at the kind of steps they will put in place in such a way that the Nigerian farmers and millers would also benefit because I have seen some of the policies the government said they are embarking upon; they would look for seeds, certain incentives to be given to the farmers.
“Now, the other aspect that has generated a lot of concerns to us the capacity, eligibility and criteria the government has said has to be followed, which is the rice millers would have to have 100 tonnes production capacity, in as far as we are concerned, I think that would appear to be some kind of discrimination against the small, medium and modular rice millers which I believe that they are the ones who are actually feeding this nation with about 80 per cent of the rice in this country are being produced by them and for the consumption mostly in the rural but also for the urban centres.
“So, we as a group have taken it up; we have written to the Minister of Finance, we have also approached some of the agencies of government, explaining to them that they need to carry everybody along who would be able to produce, particularly, the small and medium millers for them to also participate.
“There are some of these millers, they may not be able to go down to Asia to import like in Thailand, India or Vietnam, but they would be trading within the West African zone among themselves. For example, we have a request from Ghana, request about exporting paddy into Nigeria, and others. Also from Benin Republic, Cote D’Ivoire, and others. Like the AfCTA zone would be an opportunity for them to be properly integrated and get their products out there and for them to be able to import and export.
“These are the areas we have looked into and we have told the government that they should relax a little by allowing also those who are able because some of these smaller millers are in organised clusters, and they can put money together and import directly, that is what we feel should be done.
On high foreign exchange rate
“We have not started getting people who are ready to import but there are people who are standing by particularly, the rice merchants who are all over in Benin Republic, we have heard about a lot of rice paddy that has arrived Benin Republic, ready for it to get into Nigeria, and as such the issue of dollar rate we do not know, the government might also look into that but we do not know, I cannot predict or say or make any comment with regards to that but if it is an appeal why not, we can appeal to government to say if you able to identify the proper millers why can’t they say they subject the Dollar to N100 for us to be able to flood the market and for us to have business and that is if the government can sustain that, and for the real millers to be identified by their associations and say this is a genuine miller and should be supported and be given Dollar at the appropriate rate that he deserves.
“A 50kg of rice needs maybe 200kg weight of paddy, for example in my own area of production, a bag of paddy rice weighs 120kg. So one and half of that would give 50kg, and that 120kg of paddy rice goes for between N80,000 and N85, 000, so the paddy itself in the country is not also cheap. So it is also a challenge. The unit cost of a 120kg rice paddy is at N77, 000.
“Apart from the zero duty there are some hidden charges that are not government charges and you do not expect me when I pay these hidden charges to produce at a loss, I must add in order to make my own profit.”
